The MICEX index in 2015 has hit a new high since 2008, and RTS – at least since 2009. Vasily Tanurcov from “Veles Capital” notes that the RTS index has shown resilience against the background of falling oil during this period by 33%.
MOSCOW, 23 Dec. Elena Likova. With the beginning of the year the MICEX index increased by almost 25% and the RTS index over the same period, while decreases by about 1% amid devaluation of the ruble and falling oil quotations of mark Brent to the lowest levels since 2004.
In addition to cheap oil, the fall of the national currency and Western sanctions against Russia on stocks of individual companies pressed their unstable condition in the market, but at the same time, a number of papers have shown significant positive results.
Although analysts do not exclude further fall in prices on the commodity markets, which again will put pressure on the domestic stock market and individual companies, they do find reasons to be quite positive forecasts for 2016.
The UPS and downs of indexes
The MICEX index updated its maximum since 2008 and the RTS — at least since 2009, says Georgy Vashchenko of investment company “freedom Finance”. “Unfortunately, this time the growth was not qualitative, but quantitative: the main papers have grown not by improving the financial performance of companies. The reason of the price growth was the depreciation of the ruble is held the shares of exporting companies,” says the analyst.
Vasily Tanurcov from the company “Veles Capital” notes that the RTS index demonstrated a remarkable stability amid falling oil during this period by 33%.
According to the analyst of the company “Discovery Broker” Andrei Kochetkov, the best moment for entering the market was in the middle of December 2014, when foreign exchange market saw panic. However, the increase is more than 20% can be written in the active indicator of the ruble, he said.
The interest in the Russian market during the year has increased, the analyst of MC “Alfa Capital” Andrew Schenk. “In the beginning of the year we saw strong rebound after falling at the end of 2014, but in the second half of the year you could see some waves. As a result, despite weak macroeconomic conditions and strong decline in raw material prices, the stock market ends the year in positive territory”, — says the expert.
The main trends of the outgoing year
The basic ideas of the year came from oil, the ruble and external factors, according to Kochetkov. “After the most profitable in the history of the decade for the oil market in a situation of excess supply that caused the collapse of quotations of “black gold”. Naturally, this has had an impact on Russian assets,” — says the expert.
As in the calculation of RTS index accounted for the currency component, then, of course, the index came under pressure from the stronger dollar, said Yuri from the Arkhangelsk company “KIT Finance Broker”.
In this case, the MICEX index was affected by the devaluation of exactly the opposite: since most of the securities in the index export oriented, even if the fall in the dollar price of products of such companies the ruble prices were very high, he says.
Notes Tanurkov, a strong negative for the market was the slowdown in China, deflation in summer, the Chinese stock bubble and the resulting new crash in commodity prices.
After the signing of the Minsk agreements at the beginning of the year, the impact of geopolitical factors weakened, says Daria Zhelannova from Alpari. “The military operation in Syria and the conflict with Turkey has not introduced major adjustments in the Russian stock market” — says the interviewee.
According to Tanurcova, positive for the market factor was the gradual reduction of the key rate of the Central Bank (up to 11% by the end of the year) after the shock and increase it to 17% in December 2014.
Disappointment of the year
As for outsiders, 2015, here, of course, immediately comes to mind is a real tragedy in the securities of “Transaero”, says expert “BCS Express” Vasiliy Karpunin. “This company for reasons we all know for a year lost more than 95% of their capitalization and unlikely in the future to avoid a complete reset,” he says.
Disappointment of the year are the shares of the company “Dixie” (-15%), specifies Andrei Vernikov of “Zerich capital Management”. “Purchasing power has fallen due to the growth of the dollar. The population is not ready to buy goods at the new prices. Purchase prices are growing faster than retail, and the company cannot 100% inflation to shift on shoulders of buyers,” he explains.
Among the failed investments was the investment in the shares of RUSAL and ALROSA in connection with the fall in the price of aluminum and diamonds, analysts say.
Another disappointment are the shares of Gazprom, analysts said. “The company has many new problems in connection with deterioration in the pricing environment. In the end, the pressure on prices was given by the worsening of Turkish-Russian relations (the company has many projects related to Turkey)” — indicates Vernikov.
Interesting stories of the year
Ordinary shares of Mechel gained more than 100% (the company seems to have been able to negotiate with creditors), says Ilya Frolov from PSB.
Another growth leader – Sberbank (prefs rose 75.7%, ordinary shares by 62.5%). Its shares have increased due to significant purchases by foreign investors in the second half of the year, but, in our opinion, such strong growth does not reflect the fundamental picture, says Schenk.
One of the leaders among the most liquid securities analysts recognized the action “Akron”, grew on the background of the devaluation of the ruble. For the year shares jumped more than twice. The same factor also played into the hands of the owners of securities of Uralkali and PhosAgro, which have risen more than 30% and 60% respectively.
“Shares of “Akron” and “FosAgro” have been a kind of “defensive” assets in which to sit out the periods of weakening of the ruble,” — says Karpunin.
In the steel sector it is worth noting Norilsk Nickel, which became the most interesting dividend history on the market (payments in 2015 will amount to 1297 roubles, equivalent to dividend yield of about 14%), said Frolov.
According to Zhelannova of liquid securities from the point of view of dividends the most attractive paper “Surgutneftegaz”. The company’s cash position exceeds $ 34 billion and is hosted in monetary assets, primarily US dollars, she says.
“The weakening of the Russian ruble leads to an increase in net profit of the company and, accordingly, dividend payments on preference shares”, — says the analyst.
WHAT TO EXPECT IN 2016
It is possible that in the first months of 2016 in the Russian market can continue rising wave, believes Karpunin. But then comes the rather significant correction, the bottom of which can traditionally come in may-June, that is the most depressing months for the MICEX index, he adds.
By the end of 2016, the market may again show the dynamics, similar to what we saw in 2015, but the potential second half of the year will be clear more close by the summer, also said the expert.
Timur Nigmatullin from “Finam” in the coming year on RTS and MICEX expects growth in the range of 10-30%. “The economy is recovering and financial market stability returns. Unlikely in such conditions it is possible to expect a repeat of 2009,” explains his point of view of the analyst.
In connection with the upcoming elections in September 2016 in the state Duma the radical economic reform was unlikely, said Vernikov. They could become the drivers of growth, but will cause social instability, he adds. In his opinion, the authorities choose the exchange rate to curb inflation instead of exchange rate to support the economy, and in this situation it is difficult to expect strong growth of the stock market.
Daniil Egorov from Dukascopy Bank SA believes that the first half of the year the MICEX index will drop to 1600 points. “First of all, the market will be influenced by the expectations of deceleration of growth of China’s economy and resulting fall in prices on the commodity markets,” he comments.
“The market already provides a rate increase in the U.S. in the near future, however further on the dollar relative to major currencies will affect the pace of rate increases in the States,” adds Egorov.
In the summer it can begin the growth of indexes on expectations of lifting the sanctions against Russia from the EU and a possible reduction of quotas on oil production by OPEC countries to reduce the oversupply of raw materials on the oil market was also awaiting him.
“We should not forget that in case of recovery of oil prices, the main beneficiaries will be the Russian budget, and not the shareholders of the oil companies,” warns this Zhelannova.
The RTS index in 2016 will be in the range of 700-1100 points, says Vashenko. In this case, the growth to the upper boundary of this range, it is possible to count only in case of increase of the prices for oil to 60 dollars per barrel, which now seems almost a fantasy, or a sudden warming of the international situation, he adds.